What does Gross Domestic Product (GDP) represent?

Gross Domestic Product (GDP) represents the overall value of all goods and services produced within a country during a specific time period, typically measured annually or quarterly. This comprehensive measure includes consumption, investments, government spending, and net exports (exports minus imports). GDP is a crucial indicator of a country’s economic performance and reflects its economic health and growth over time.

In contrast, the other options focus on specific aspects of the economy but do not capture the complete picture that GDP provides. The total profits of a country’s corporations would only account for the corporate sector, disregarding individual contributions and government expenditures. The amount paid to employees pertains only to labor costs and does not encompass the entire output of goods and services. Lastly, the national budget and its allocation for services reflects government spending and priorities but ignores the private sector's contributions to the economy. Thus, GDP serves as a more comprehensive measure to understand the economic activity of a nation.